Political economist and best-selling geopolitical author F. William Engdahl says that the U.S. risks stumbling into a nuclear war with Russia over the situation in Georgia and South Ossetia, as President Bush and Condoleezza Rice both heightened their rhetoric against alleged military breaches of the cease-fire.

The Secretary of State has threatened Russia with international isolation over its response to the Georgian sneak attack on South Ossetia last week, an assault that claimed around 2,000 civilian lives.

President Bush has also demanded Russia change its course amid talk of the country having its G8 membership suspended and its WTO membership blocked.

Western news outlets claimed again today that Russia continues to perform aggressive military maneuvers inside Georgia, but such reports have been strenuously denounced by Russian officials as propaganda. Yesterday’s widely-reported allegations, that Russian forces were assaulting the Georgian town of Gori and heading for the capital Tblisi, proved to be inaccurate.

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On Monday night Georgian President Mikhail Saakashvili falsely claimed that Russia had launched a full scale invasion of Georgia to “cut it in half,” in what observers called[2] an attempt to stir the U.S. and Europe into offering immediate military support. Saakashvili lied again when he claimed that Tbilisi airport and Poti port would be placed under the control of the U.S. military, a claim swiftly denied by the Pentagon.

Russian Foreign Minister Sergei Lavrov today labeled such reports[3] as “A propaganda scam, that is attempting to present an aggression on the part of the Georgian army against its own citizens as a conflict between Georgia and Russia.”

Geopolitical expert and author of the best-selling book “A Century of War: Anglo-American Oil Politics and the New World Order”, F. William Engdahl today warns that the crisis could escalate into a full blown nuclear showdown between the U.S. and Russia.

“What Washington is literally playing with here is nuclear war by miscalculation – thinking they can outflank the Russians psychologically and militarily,” said Engdahl, adding that Russia has clearly drawn a line in the sand with regards to Georgia’s attempt to invade South Ossetia.

“Russia went into Georgia to essentially deliver a message,” states Engdahl . “There are more than 1,000 US military special forces in Georgia doing exercising, training Georgian troops, before Georgia launched the attack on Ossetia on 8 August. There are 1,000 Israeli troops at least, private security firms and military advisors, including advisors who are upgrading the Georgian air force in an installation near Tbilisi. That’s what the Russian airplanes hit, and they essentially made the military strike on South Ossetia militarily impossible by making incursions inside Georgian territory before they announced that they were calling a halt to their military operations.”

Engdahl states that the conflict boils down to the fact that there is a new cold war over oil in the Central Asian region, with U.S. oil companies having opened the BTC pipeline which runs through Azerbaijan and Georgia and brings oil from the Caspian Sea to the west, sidelining Russian territory.